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(I Can’t Get No) Satisfaction:

A Study Of Internal Marketing, And How It Is Increasing Satisfaction Amongst Employees, Customers & Sales

INTRODUCTION

Imagine that Dave is the marketing manager for a large travel agency. He has recently switched his employment from sales manager at another, smaller agency to the position he now holds. He has only been at this new agency for a few weeks, so to gain a better understanding of the agency’s revenues and expenses, he decides to review sales figures from the past few years. Dave notices that sales have dropped almost 12% from 2006-2009. He reviews other documentation and finds that everything seems to be consistent throughout those years, from their vacation packages (prices, locations, tours offered) to their marketing campaigns (scope, budget, implementation) to the business itself (locations, upper management, shareholders). He cannot seem to comprehend the cause of such a large decrease in sales.

Troubled by this, Dave decides to phone Chris, an old college friend who is also in the marketing industry. Chris suggests that he review customer satisfaction figures for those years. After some digging, Dave comes across the customer satisfaction ratings from 2006-2009. Sure enough, they are consistent with the decline in sales. Dave phones Chris again and explains that, while there is consistency in the two figures, the company has not done anything differently throughout those years to cause the drop. Pondering this, Chris comes up with a theory: declining employee satisfaction could be responsible for the decline in customer satisfaction, and therefore the loss of sales. Looking into this possibility, Dave finds that his agency does not seem to monitor the satisfaction of their employees. He believes that Chris may be on to something, but does not know what steps he should take to increase employee satisfaction, so he decides to call Chris one last time. Chris suggests a concept to Dave that he feels will revitalize the sales figures and overall satisfaction in his agency: internal marketing.

Though there is not a single correct definition for what internal marketing is, Chris describes it as the process of creating a customer-focused mindset amongst the employees of a company, involving everything from the satisfaction of employee needs to the creation of unity amongst employees. Dave decides to research the foundations of internal marketing, from the early definitions and theories to the concept of internal-marketing orientation. He looks at the dimensions of internal marketing to determine who is using internal marketing concepts, what strategies are being used, and why they are being used. Dave also researches companies who have found success with the application of internal marketing, such as Pepsi-Cola and Southwest Airlines.

Dave compiles his findings into a report, and creates a presentation to show to the top management of his agency.

The following is a summary of his findings.

FOUNDATIONS

Theories & Definitions of Internal Marketing The concept of internal marketing was first introduced in the 1970s by Dr. Leonard L. Berry to improve the consistency of top-quality service offered by companies (Kelemen 2007). Berry, a professor of marketing at the time, felt that if a company could satisfy the needs of their front-line employees (those who actively interact with customers), these employees would, in turn, satisfy the needs of the customers. Berry defined internal marketing as “the philosophy of treating employees as customers…and it is the strategy of shaping job-products to fit human needs” (Rafiq 1993). This definition relates back to the idea of relationship marketing, “where the most important relationship is with the customer, and the goal is a satisfied customer and a productive, enduring relationship” (Piercy 1994). In the realm of

internal marketing this relationship is with employees, or ‘internal customers,’ a term that was first suggested by Evert Gummesson in the late 1980s (Gounaris

2006).

Another explanation of internal marketing was suggested by Christian Grönroos in the early 1980s, which builds upon the definition proposed by Berry. While Berry felt that internal marketing should be directed towards front-line employees, Grönroos believed that internal marketing was about “developing motivated and customer conscious employees at all levels, regardless of hierarchies and departmental constraints” (Gounaris 2006). Grönroos also viewed internal marketing as “an initiative aimed at motivating employees toward service-mindedness and customer-oriented performance through an active marketing-like approach” (Kelemen 2007). This concept would require companies to craft full marketing campaigns for their entire internal organization, as opposed to Berrry’s initial notion of simply satisfying the needs of the employees who frequently interact with customers.

Mohammad Rafiq and Pervaiz K. Ahmed, both professors of business in the United Kingdom, felt that a third approach to internal marketing, one that combined the previous definitions proposed by Berry and Grönroos, was necessary to fully comprehend the concept. Rafiq and Ahmed identified internal marketing as “a planned effort using a marketing-like approach to overcome organizational resistance, to change and to align, motivate, and inter-functionally co-ordinate and integrate employees towards the effective implementation of corporate and functional strategies in order to deliver customer satisfaction through the process of creating motivated and customer-oriented employees” (Kelemen 2007). This ‘holistic’ approach suggests that departmental strategies and policies, in relation to internal marketing, should not necessarily be confined to one particular

department. Instead, all departments across the entire organization should be combining strategies to lead toward the common goal of creating employees that will be motivated to put emphasis on customer satisfaction.

As there as there are many interpretations of what internal marketing is, one unanimous definition of the concept does not exist. This may be a reason that, while many scholars note the importance of internal marketing, it is only being applied in a small number of companies (Gounaris 2006). Another reason may be that there is limited literature on the subject. Regardless, because of this deficiency, “there is no generally accepted instrument to measure [internal marketing] or to examine [its] quantitative impact” (Lings 2004). The most significant development thus far lies in the proposition of ‘internal-market orientation’.

Internal-Market Orientation Grönroos proposed the idea that organizational departments and positions are irrelevant to internal marketing as all employees influence the value that their customers receive (Gounaris 2006). This notion agrees with the concept proposed by Gummesson of ‘part-time marketers,’ or individuals that are not employed by the marketing or sales departments but participate in marketing activities nonetheless (Gummesson 1990). These individuals may come from any department, from production to management to product development and beyond. As almost any employee in a company can be considered a marketing influence towards customers, it is important to unify the internal organization and to aid in employee satisfaction; this is where internal-market orientation comes in.

The notion of an internal-market orientation, or IMO, is derived from “the company’s need to develop a strong internal market orientation prior to successfully adopting an external (market) orientation” (Gounaris 2006). The following is a list of characteristics of IMO:

“it represents the synthesis of specific beliefs with specific ‘marketing-like’ behaviours” (Gounaris 2006)

“it promotes the need to plan and build effective relationships between the company’s employees and management” (Gounaris 2006)

“the basis for these relationships is the company’s commitment to produce value for its internal market by understanding their expressed and latent needs, much in the same way as commitment is required to produce value for the company’s customers” (Gounaris 2006)

IMO can be measured by gathering intelligence that is relevant to the internal market, by circulating this intelligence between supervisors and employees, and by using suitable internal marketing strategies to respond to this intelligence (Gounaris 2006). Though increasing a company’s focus on IMO may require multiple resources as well as a significant amount of time, this will not necessarily diminish external marketing or customer support efforts. If a symmetric orientation can be developed, it will enhance “the effectiveness of a company’s strategic response and, eventually, its ability to satisfy customers consistently so that sales and profits can grow” (Gounaris 2006). This ‘symmetric orientation’ may be easier to develop than expected, as the issues that the external and internal markets face tend to mirror each other in everything from the dimensions of customer satisfaction to the perceptions of service quality to the outcome of customer satisfaction (see Fig. 1-3) (Piercy 1994). Though this relationship may be complex, it seems as though “external customer satisfaction is both dependent on, and a contributor to, our

internal customer satisfaction” (Piercy 1994). If a company wishes to adopt a successful IMO, it would be wise for them to keep these similarities in mind.

DIMENSIONS

Who Should Be Using Internal Marketing? Internal marketing can be an extremely valuable tool for many companies, especially those in service industries. In keeping with Rafiq and Ahmed’s holistic definition of internal marketing, all employees of a company that decides to practice internal marketing should be involved. While front-line or contact employees may spend the most time actively interacting with customers, almost anyone involved with a company, both internally and externally, from employees in customer relations to employees in computer services, may take up the position of a part-time marketer (as suggested by Gummesson). Therefore, it is important that employees from all branches and departments of a company are recognized, that their needs are met, and that they are being involved in an internal marketing campaign.

What Should Be Done? There are many things that a company can do to increase their IMO. First and foremost, employees like to be ‘in-the-know’ as to what is going on inside their company. Certain documents, such as “current and targeted customer profiles, product/service usage, customer satisfaction results, and complaint tracking should be shared with all employees” (Stershic 2001). This information will help employees to better understand their customers and will therefore strengthen their relationships with employees. Companies should also consider strategies to get employees on board with new campaigns before they are released to the public, something that less than 50% of companies actually do (Hein 2009).

Remember that keeping employees in the loop is imperative. Employee events, meetings, and training programs are all great ways to involve workers. Not only does this help employees understand new company goals, it also makes them feel like they are part of the brand. It is also important to reinforce values that are customer-focused, such as how MBNA, a major credit card issuer, posts ‘Think Like The Customer’ above office doorways (Stershic 2001). This way the employees will always have customers on the mind. Lastly, it is important to reward employees for their efforts. While cash and pay increases are representative of positive reassurance, non-cash rewards such as merchandise and travel may be a more effective motivator, as many employees perceive cash and bonuses and things that they are due (Chang 2005). Gift certificates, watches, clothing and electronics are some examples of popular choices for sales incentives (Chang 2005).

Why Should Internal Marketing Be Used? “Ensuring that [a] business stands on the shoulders of its employees is essential to delivering a positive brand experience” (Reed 2006). There are a number of reasons why internal marketing should be used, thought most relate to the one, main reason, which is this: companies that increase their employees’ satisfaction will find that their employees will increase their customers’ satisfaction, and an increase in customer satisfaction will lead to an increase in profits (see Fig. 4). A recent study conducted at Northwestern University in Evanston, Illinois determined that internal marketing ranked in the top three determinants of the financial performance of a company (Chang 2005). Simply put, “building internal brand enthusiasm benefits employee motivation and the bottom line” (Chang 2005). Companies that employ internal marketing efforts don’t have much to lose, but they have a whole lot to gain.

Potential Drawbacks Though it has many benefits, internal marketing also seems to have some potential drawbacks. As internal marketing involves attending to the needs of employees, companies may run into a problem if they find that their employees’ needs differ from the needs of the customers (Gounaris 2006). For instance, employees may dislike using a multitude of methods (i.e. phone, email, chat, text) to communicate with customers, while customers may place extreme importance on the variety of a company’s contact methods. It might be difficult for a company to find a balance between the needs of their employees and their customers.

Another problem lies with the notion of treating employees as customers. Employees may feel that, as customers, the ideas of the ‘customer is always right’ and ‘the customer is king’ apply to them (Rafiq 1993). If this were the case, the amount of requests and demands from employees would be impossible for organizations to handle. “It is for this reason that in this approach employees do not know they are customers even though they are treated as such” (Rafiq 1993). This important point will help to diminish unrealistic employee expectations.

LEADERS IN THE FIELD OF INTERNAL MARKETING

Pepsi-Cola PepsiCo, the beverage giant based out of Purchase, NY, is no stranger to the benefits of internal marketing. Bill Wyman, one of Pepsi’s senior marketing managers, said the following: “If we are going to be successful in the marketplace, we were going to have to live and breathe the Pepsi brand will all of our employees. We set out to find every opportunity to communicate what we are doing, and why and how we are doing it” (Hein 2009). Before they introduced their

‘Word Play’ campaign to the public, PepsiCo brought an individually chosen group of employees to their headquarters and showered them with everything from hallway posters to giant billboards, all of which displayed Pepsi’s new logo and optimistic attitude, a process which Wyman refers to as ‘invertising’ (Hein 2009). “Pepsi took great pains to assure that its customers weren’t just part of the marketing process, but that the internal and external messaging was aligned” (Hein 2009). At least ten web seminars were conducted to inform employees and bottlers of their new campaign, and articles and reminders were placed in an internal company newsletter. Wyman said that after a presentation on their Rally Day, employees came up to him proclaiming, “Now I get it” (Hein 2009). It is this employee understanding and appreciation that makes all of PepsiCo’s efforts worthwhile.

Southwest Airlines “Above all, employees will be provided the same concern, respect and caring attitude within [the company] that they are expected to share externally with every Southwest customer” (Czaplewski 2001). This declaration is taken from the mission statement of Southwest Airlines, a company that has been excelling in the implementation of internal marketing strategies since its inception. Some internal marketing tactics Southwest uses include “offering a vision that provides purpose and meaning to the workplace, competing aggressively for the most talented people, preparing employees with the skills and knowledge they need to perform while at the same time emphasizing team play, motivating individuals through measurement and reward, providing freedom to excel, and ensuring that organizational management understands the internal customer” (Czaplewski 2001). Their success in internal marketing has had an extremely positive impact on customer and employee satisfaction, as well as sales. For instance:

“Southwest has been profitable every year since it first turned a profit in 1973” (Czaplewski 2001)

“Southwest received five ‘triple crown’ awards in the 1990s for lowest customer complaints, most on-time arrivals, and highest quality baggage service” (Czaplewski 2001)

“Southwest has among the lowest employee turnover rates in the industry” (Czaplewski 2001)

“In Fortune magazine, Southwest was one of two companies to be rated in the top-10 most admired companies as well as the top-10 best places to work” (Czaplewski 2001)

“In a recent Consumer Reports study, Southwest was the only airline to be rated as offering below-market prices and above-average service quality” (Czaplewski 2001)

Southwest’s focused approach to internal marketing shows a mature understanding of the crucial role that employees play in the success of a company. Due to their reputation as being such a phenomenal company to work for, Southwest receives a vast amount of job applications with minimal advertising, a fact that is unlikely to change anytime soon (Czaplewski 2001).

CONCLUSION

At the conclusion of his presentation, the department heads at Dave’s travel agency unanimously agreed that their company could benefit from the implementation of internal marketing strategies. They acknowledged the lack of a universal definition for internal marketing, and proposed that a combination of theories be used that would best apply to their business. His company’s leaders decided it would be best

if they worked together with Dave to develop an internal-market orientation that would involve the development of an internal marketing campaign, an increase in overall communication between employees and management, and the creation of a method to deal with the needs of their employees. They agreed with Dave’s suggestion that the whole company should be involved with internal marketing strategies, not just the front-line employees, and that it was important to define the dimensions of their new program to determine exactly what needs to be done.

Dave’s presentation helped the department heads at his agency understand that an internal marketing campaign, if done correctly, will cause an increase in employee satisfaction levels, which will cause an increase in customer satisfaction levels, and will eventually lead to an increase in profits. While Dave did cover some potential drawbacks of internal marketing, the department heads felt that, as long as they were careful with their implementation strategies, the benefits would outweigh the weaknesses. Though they were engaged throughout Dave’s presentation, it was the mention of companies like Southwest Airlines and Pepsi-Cola, who are excelling in the field of internal marketing, which really inspired the leaders of his company. They felt that a successful internal marketing campaign could bring nothing but positive changes to all aspects of the company, from the employees to the management to the customers, and everyone in between.

The department heads granted Dave the task of developing an internal marketing structure, which would involve identifying guidelines, determining strategies, and constructing a timeline for the implementation of their internal-market orientation. Dave decided to phone his friend Chris to tell him the news, as he proposed the idea of internal marketing to Dave in the first place. Chris was overjoyed that his suggestion could be of help to Dave and his company. Dave, however, did not realize that he would get stuck doing all of the work on this new campaign, and he

was not so enthusiastic at the thought of having the responsibility of developing a whole internal marketing framework in addition to his normal job duties and responsibilities. Chris told Dave that he should be pleased with the impact of his presentation, and responded to Dave’s frustration, telling him, you can’t always get

what you want need!

but

if you try sometimes, you just might find, you get what you

References

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http://www.opsi.gov.uk/acts/acts1994/ukpga_19940033_en_1. Last accessed 18 April 2010.

Hesmondhalgh, D. (2000), “The British Dance Music Industry: A Case Study of Independent Cultural Production”, The British Journal of Sociology, Vol. 49 No. 2,

pp.234-51.

Hutson, S. (1999), “Technoshamanism: Spiritual Healing in the Rave Subculture”, Popular Music & Society, Vol. 23 No. 3, pp.53-77.

Pini, M. (2006), “Women and the Early British Rave Scene”, in The Popular Music Studies Reader, Nabingdon and New York: Routledge: pp.124-202.

Sanders, B. (2006), “Drugs, Clubs and Young People”. Aldershot: Ashgate: pp.1-6.

APPENDIX

FIGURE 1 (Piercy 1994)
FIGURE 1
(Piercy 1994)
FIGURE 2 (Piercy 1994)
FIGURE 2
(Piercy 1994)

FIGURE 3

(Piercy 1994)

FIGURE 3 (Piercy 1994) FIGURE 4 (Lings 2004)

FIGURE 4

(Lings 2004)

FIGURE 3 (Piercy 1994) FIGURE 4 (Lings 2004)